29th Dec 2015 09:42
LONDON (Alliance News) - The insurance industry is set to face a significant bill from the flooding that has devastated large swathes of northern England, according to two estimates of the damage, amid concerns that a new storm could bring further problems for the region.
KPMG, the accountancy, warned the economic impact of the flooding which hit parts of the UK following Storms Desmond and Eva over the course of December could be nearly GBP6.0 billion, with insurance claims for the flooding estimated to hit around GBP1.5 billion.
KPMG, however, also suggested many households and businesses will not be adequately insured and will have to shoulder about another GBP1.0 billion in costs, with further spending then required by local authorities, along with a big chunk of spending on new flood defences.
PwC, another accountancy, said it estimated the economic loss from the floods could be between GBP900.0 million and GBP1.3 billion, with insurers bearing up to GBP1.0 billion of that.
The cost estimates hit insurance company shares early Tuesday, the first trading day in London since the scale of the recent flooding became apparent. RSA Insurance Group PLC was down 1.4% to 424.90 pence, one of the worst performers in the FTSE 100. Rival Aviva PLC was down 0.2% to 518.00p.
In the mid-cap index, Jardine Lloyd Thompson Group PLC, which operates a specialty insurance and reinsurance broking business and a wholesale insurance broking arm, was down 2.2% to 928.50p.
Amid these concerns, more worries have been raised that Storm Frank, due to sweep into the UK on Tuesday evening, will cause more damage. Nine severe flood warnings are currently in place in England and Wales, mostly centred on York, which was badly hit by flooding on Saturday.
David Cameron, the UK Prime Minister, defended the government's policy on flood defence spending, and Rory Stewart, the floods minister, told the BBC's Today programme on Tuesday the government would be open to an external review of its programme being held.
The Environment Agency on Monday said the UK would need a "complete rethink" of flood defences following the flooding in recent weeks, which has resulted in swathes of Cumbria, Lancashire, Greater Manchester and Yorkshire facing severe flooding.
The problems have also reignited the fight about the North-South divide in the UK, with the Yorkshire Evening Post, a regional paper in Yorkshire, heavily criticising the government for the lack of spending on flood defences in the north of England, suggesting it would be "unthinkable" that such devastation would ever be seen in London or the South East.
By Sam Unsted; [email protected]; @SamUAtAlliance
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